Self employment

[lazzer]

Hope it all goes well.

 

[bocadillo]

I'm also a little confused by his comment, I have no idea what he means, but just to clear that point up for you, you absolutely can do part-time (or full-time) PAYE work and also be self-employed at the same time. It would actually be unlawful to try to prevent you from doing so.

Drew didn't make himself absolutely clear. I think what he meant was that you should not be employed by a company and also do 'self-employed' work for the same company.

 

[Siouxsie]

Are you going to be woking for the one company still? If so you're not really supposed to be self employed.

My wife has the same issue, although she now has a Ltd company to get round it all. There are some good tax breaks as well, we can claim 40% back on household bills and council tax.

No IR35 issues?

 

[drew]

From what I understand of the clear as mud legislation is that you're not supposed to be self employed and then have one client, as you would be deemed to be employed by them.

 

[The Major]

From what I understand of the clear as mud legislation is that you're not supposed to be self employed and then have one client, as you would be deemed to be employed by them.

I believe that is correct, it has something to do with the employers NI contributions. Having said that I know someone in the position and he gets away with it.

 

[Siouxsie]

From what I understand of the clear as mud legislation is that you're not supposed to be self employed and then have one client, as you would be deemed to be employed by them.

IR35 was designed to stop people setting up a company (often being the only real employee of that company) and then receiving payments via that company rather than directly from a client. As The Major says (and you did too) it can have tax advantages to do so, (eg receiving dividends rather than a salary, and items you can claim as business expenses) so HMRC don't like it.

HMRC aren't having too much luck challenging people under IR35 though but you need to have very carefully drafted contracts to avoid potential problems especially if you have essentially a one man company.

 

[drew]

There are other reasons to set up a ltd company besides saving tax and making claims, for one the protection it provides is a bonus over being a sole trader.

While tax loopholes are there people will take advantage of them and rightly so.

 

[Siouxsie]

I agree (although the benefit of the protection is also diminishing in reality), in fact I am a director of such a company. I was merely trying to point out that you can't get around the problems of HMRC trying to treat you as an employee of the client company merely by incorporating anymore, sadly.

There are of course good reasons why some people are better off being self employed.

 

[drew]

My wife has other clients so she gets round this problem.

But for the OP to go self employed just because the company he works for wants him to sounds a bit shady.

 

[Jeff]

But for the OP to go self employed just because the company he works for wants him to sounds a bit shady.

That's not what's happening. Read the first post again.

 

[Matt_B]

My wife has other clients so she gets round this problem.

But for the OP to go self employed just because the company he works for wants him to sounds a bit shady.

He will continue to work for the company and then be self employed doing something different; his employer won't be a customer.

 

[drew]

In that case I would suggest speaking to an accountant, you can usually find one that will give you an hour for free.

 

[FryattFox]

From what I understand of the clear as mud legislation is that you're not supposed to be self employed and then have one client, as you would be deemed to be employed by them.

Partly correct - this is one of the factors that HMRC would look at when deciding which classification one fell under, as well as considering others such as financial risk, mutuality of obligations, equipment, and holidays & sickness. Essentially it comes down to whether you have a contract of service or a contract for services, although in this case it's pretty clear that it's the latter.

 

[Real Sharapova]

Partly correct - this is one of the factors that HMRC would look at when deciding which classification one fell under, as well as considering others such as financial risk, mutuality of obligations, equipment, and holidays & sickness. Essentially it comes down to whether you have a contract of service or a contract for services, although in this case it's pretty clear that it's the latter.

And never ever forget that HMRC give their interpretation of the law, which almost always is incorrect.

 

[The Grand Old Fox of York]

I was a director of my own company for the last few years and this is spot on. If you go down the Limited Company route then it can be highly profitable, but you need to be contractually watertight to not be caught by IR35 (if investigated of course). I know that HMRC will even look to see if you sign in each day, have a company email account or are invited to the Christmas party. From what BB has said in terms of the kind of work he wants to do, I suspect that incorporation is not the right way to go anyway.

Oh, and if it comes to it, keep your own books but be organised, and then at the end of the year hand over almost complete accounts to an accountant to tidy up, fill in forms and make sure you maximise your profit/avoid paying unnecessary tax. They always say a good account is free, as they will save you more than they cost anyway.

As far as I know your first job would be to call HMRC and get what if I remember correctly is called a Unique Taxpayer Reference.

Go for it BB, I don't think it will be that hard, especially if you aren't Limited. There are loads of forums about this to help you out.

 

[TornadoShaunUK]

I have a self employed income too and obviously have to declare any profits to HMRC through a tax return at the end of each tax year. I'm in a similar position to you in that I am employed but it's not a 100% reliable 40 hours a week gig. On the tax return you will also need to write out how much income you have earned and tax you have paid from your regular work's p45/p60. I don't think you really need to pay anyone to do your record keeping for you, it's easy enough to do for yourself - you really need to do this anyway to work out what profits or losses you are operating on.

If you're getting into retail then I'd suggest going for something you enjoy or are knowledgeable about, but at the same time try and find a niche market that isn't too over crowded. Alternatively if you have a skillset, such as being a qualified electrician then setting up as an electrician or something is always an option. You can find advice on starting out in business and in some cases you might even be able to get a grant to help you start out but I'm not sure how that'd work with you having a PAYE income, I never applied for any grants myself.

 

[drew]

I'm looking for a gardener, so if you're around north Leicester I can throw some work your way.

 

[FryattFox]

I'm looking for a gardener, so if you're around north Leicester I can throw some work your way.

Cash in hand?! :icon_wink

 

[drew]

He can have cash, it's up to him to declare it

 

[spionfox]

I'm looking for a gardener, so if you're around north Leicester I can throw some work your way.

You want a gardener? Crikey, how the other half lives eh?!!